Proposal to extend Senior Managers and Certification Regime means major changes for HR teams of all financial services firms


The key changes proposed include:

  • the introduction of a statutory duty of responsibility
  • which will supersede the ‘reverse burden of proof’, and
  • the announcement of the extension of the Senior Managers’ and Certification Regime (SM&CR) to all sectors of the financial services industry.

Further information on the new regime can be found in this report on the RegZone website.

Implications for HR teams

Many of the ‘business as usual’ processes that will support the new regime will fall to the HR team as the people managers within a firm. This will involve notifying and educating employees about how the new regime applies to them and embedding new behaviours to respond to the requirements of the regime.

It is therefore essential that relevant HR policies, procedures and processes, as well as record keeping arrangements are reviewed to ensure that firms are ready to be able to respond to the new requirements.

The new regime will have an impact on HR processes throughout the lifespan of the employment relationship, affecting nearly all staff members. The impact will be felt in: recruitment, such as obtaining references, criminal records checks, preparing statements of responsibilities; on-going HR processes, such as adaptation of appraisal processes to certify as fit and proper those within the senior managers and certification regime, disciplinary processes and training for staff on the Conduct Rules; and termination and handover arrangements including provision of references and succession planning.

Firms should also take this opportunity to ensure that contracts of employment are fit for purpose in the context of the new regime and that they provide the firm with the flexibility and control needed to ensure both compliance with the new regime and effective business management.

It is anticipated that in line with this recent change in direction by the Government that recent proposals concerning regulatory references and new rules concerning whistleblowing arrangements may also be extended to all firms in the financial services sector. Further information on these can be found in our recent law-now which can be found here.

It has been a busy time for those in the HR teams of banks with plenty to do before the regime comes into force early next year and the new whistleblowing rules take effect in September 2016. For the wider financial services sector the journey in relation to the senior managers and certification regime is just beginning. The CMS employment team has been working with HR teams within a number of banks to help them to prepare for the new regime. If you would like assistance with HR and employment law impact on your organisation please contact a member of our employment team.